When undertaking estate planning, we usually prioritise the organisation of any physical items – the personal belonging, pieces of jewellery, cars, and property.
But one area that can often be overlooked is the distribution of digital assets that a person owns. It’s vital that these are attended to in much the same way that physical assets are treated, and here’s why.
What are digital assets?
A digital asset refers to anything that is stored digitally and comes with a right to use. There are many things we use every day which would be considered digital assets, such as:
- Email accounts
- Social network accounts (Facebook, Instagram, Twitter)
- Accounts on file hosting website (Google Drive, Flickr)
- Web domains which are owned by you (business websites, personal websites)
- Digital banking accounts (PayPal, Starling, Monzo)
These will typically be password protected, so if you pass away then the access to these can be lost. Digital assets can also mean the files stored on your computer or hosted online, including:
- Photos or videos
- Message histories
- Other properties created and stored digitally (artworks, renders, etc.)
Finally, there is an extremely valuable digital asset which can be held by an individual within the digital space – cryptocurrency.
Why are digital assets so important?
If digital assets aren’t listed when you complete your financial estate planning, these assets can be lost due to lack of access. While files will be locked away within your accounts becoming inaccessible, any digital funds such as cryptocurrency could end up becoming part of the UK’s growing unclaimed funds pot.
Stats which were recently released by the Law Society revealed that a staggering 93% of people who have made a will have not included any digital assets in it. As practically everyone within the modern world has some form of digital presence, this likely means some vital assets were omitted from the financial estate planning process.
On top of this, a quarter of those surveyed were unaware what will happen to their digital assets after they die, with only 7% of respondents understanding what would happen with their digital assets after they pass away.
Whether you hold an amount of Bitcoin, Etherium, or even Dogecoin, this holds a financial value which could be passed onto a loved one within your will. You can even pass on access to your accounts, such as to streaming services, so those close to you can use them or embrace your memories through discovering your favourite playlists.
Your social media accounts and message history may contain significant amounts of information which you’d prefer to be deleted in the event of your death. Leaving these things unaccounted for can result in confusion or cause further difficulties for them during an already challenging time. You can always nominate a legacy contact for social media profiles to memorialise your account.
Things about digital assets to be aware of
There are a number of provisions you can take to protect your digital assets and ensure they reach the people who should have them when you die. You can set up an online ‘safety deposit box’ or digital vault which can contain usernames and passwords for your accounts across every valuable platform you regularly used. This can then be passed onto a designated individual within your will.
You could also create a physical list to be stored in a safe place, but you’ll need to ensure you’re manually updating it whenever a password is changed or a new account needs adding to the list.
Separate your digital assets which have sentimental value and monetary value, covering provisions for each of these separately. Explain how these assets should be distributed, as those with monetary value may need to be withdrawn first and then split among several parties.
When completing your financial estate planning with a wealth management firm or financial services provider, including a digital assets clause within your will can make things considerably easier for your family.
Nominating a loved one as an executor for your digital assets can streamline the process and ensure any assets, sentimental or monetary, end up where you wish them to go.